Worries about a name change for Electronic Arts’ soccer game are providing an opportunity for investors, BofA Global Research believes.
On Tuesday, analyst Omar Dessouky raised his rating for
EA
stock (ticker: EA) to Buy from Neutral and increased his price target to $150 from $145.
The concern arises because EA has ended a multidecade branding partnership with FIFA for its annual soccer game, saying in May 2022 that it would change the name starting with the 2023 edition. This year’s title is the first to be named EA Sports FC.
“We believe investor fear over SPORTS FC’s franchise transition is overblown,” he wrote. “We view EA’s current valuation discount vs. game publisher peers as a particular attractive point of entry.”
EA stock was up 3% to $128.28 in Tuesday trading.
The analyst cited how EA currently trades at just 16 times consensus estimates for its fiscal 2025 earnings per share, putting the valuation near the bottom of its five- year historical range. He also said EA is trading at 25% discount versus its industry peers.
Last week, EA said the latest version, FC 24, had more than 11.3 million players during its first week. That is 10% more than in the comparable period last year.
EA should also thrive in the coming years because of robust overall industry growth in software, according to the analyst.
“We believe PC/Console game publishers could benefit from a shift in gaming budget to console hardware to gaming content” he wrote. “EA’s largest franchises are well-positioned to gain wallet share.”
EA shares have rallied by 5% this year, while the
Nasdaq Composite
index is up 29%.
Write to Tae Kim at [email protected]
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